Will the BoC Begin Cutting Rates Again? Here’s What Market-Watchers Say

Wahi asked real estate industry professionals — including economists, academics, and REALTORS® — about their predictions for the Bank of Canada’s next rate announcement.

By Josh Sherman | 3 minute read

Leading up to each scheduled BoC rate announcement, Wahi surveys upwards of a dozen real estate leaders to gauge market sentiment and find out where the industry thinks rates are headed.

Jobs! Jobs! Jobs! Most participants of an informal Wahi survey of real estate market-watchers cited a weakening Canadian labour market as one of the main reasons to expect a rate cut from the Bank of Canada this Wednesday.

Eight-out-of-10 respondents to Wahi’s latest Rate Outlook Panel say the central bank will step off the sidelines and embark on a 25-basis-point cut to the influential overnight rate at the central bank’s next scheduled rate announcement on Sept. 17. This matches the 80% odds of a cut previously reported by The Globe & Mail and follows Wahi’s July survey in which market-watchers correctly predicted a hold.

In the days leading up to each rate announcement, Wahi surveys upwards of a dozen real estate industry professionals, including economists at some of Canada’s biggest banks as well as academics and analysts. Respondents to Wahi’s Rate Outlook Panel are asked whether they anticipate a rate cut — and, if so, by how much — as well as the reasoning behind their decision.

Recent August numbers from Statistics Canada, which signalled that Canada shed jobs for the second consecutive month, were top of mind for respondents to the latest panel.

“The Bank of Canada is going to cut interest rates — there is no question about it if you look at the labour market, if you look at the housing market, if you look at inflation — I think that the economy needs more monetary easing,” says CIBC Deputy Chief Economist Benjamin Tal.

To Penelope Graham, mortgage expert and director of content at Ratehub.ca, rising unemployment rate, which last month reached the highest level since the pandemic at 7.1%, is not a blip on the radar. It’s a significant sign that strained trade relations between Canada and the U.S. are taking a toll, necessitating action from the BoC.

“The latest jobs numbers, both in Canada and the US, are finally showing the real impact of Trump’s trade upheaval,” says Graham.

In addition to the latest Labour Force Survey numbers from StatCan, Peter Norman, vice president and economic strategist at Altus Group, noted that the Canadian economy contracted in the second quarter as tariffs curtailed trade with the U.S. 

“All of these [data] suggest we’re currently in a technical recession and the Bank is very likely to respond with a modest cut,” says vice president and economic strategist at Altus Group. 

If the BoC does cut rates this week, it would mark the end of a wait-and-see approach from policymakers. At each of the past three rate announcements, the central bank has maintained the overnight rate at 2.75%. 

The bank has to play a delicate game when considering a rate change. Lower interest rates encourage more spending, both for consumers and businesses, but they can also heat up inflation.

Currently, inflation is still hovering around the central bank’s 2% target. Robert Hogue, assistant chief Economist at RBC, suggests this will keep the BoC on the sidelines once again. 

“Canada’s economic resilience and sticky core inflation support our view that the BoC will conclude its easing cycle at 2.75%,” says Robert Hogue, assistant chief Economist at RBC.

However, Hogue acknowledges that the latest jobs and GDP figures make it “a very close call.”

Hogue is not the only one unconvinced that the current economic climate calls for a rate cut just yet. 

Ben Myers, president and founder of Bullpen Consulting, a boutique condo consultancy firm, suggests that the economic landscape has not reached the point where lower rates are called for. “The economy is not poor enough to warrant a decrease.”